Monthly Archives: December 2015

Beware the black swan: That was the warning from GlaxoSmithKline quality assurance and compliance manager Stephen Mitchell at a recent conference in London.

“We’ve got to refocus on areas of potential vulnerability in the supply chain,” he’s reported as saying. “If there’s a massive power failure or your IT goes down, what do you do? You need a plan B and even a plan C, which we don’t see often enough.”

Mitchell’s surely right about the need to look at supply chain weaknesses in the pharmaceuticals industry. Whether a power failure qualifies as a “black swan” is another question, though.

In author Nassim Taleb’s original use the term had in mind “highly improbable” events that have an extreme impact. Power cuts are, as many businesses and homes have recently discovered, all too common – whether as the result of flooding, storms or technical problems.

For the most part, the pharma industry is able to mitigate the impact of such cuts, so that they don’t interrupt the operation.

Power cuts do have the potential to seriously challenge the supply chain, however. First, as Mitchell pointed out, human error can rapidly undo resilience – and, as this tale makes clear, quickly make highly improbable events materialise. There are also a number of more recognisable black swan events, such as EMP attacks or geomagnetic storms, as well as ever-present threats such as terrorism.

For many parts of the world, however, fragile and unreliable power networks are not the results of black swans but businessasusual. The challenge for businesses not directly affected is, most obviously, to have robust strategies in place to ensure they know which parts of their supply chain are in vulnerable regions and the strategies those suppliers have in place to ensure resilience.

But there is another element to robust continuity planning, too: looking ahead to potential future problems much closer to home, where we take reliable power for granted. As ever, the best way to keep the lights on is to make sure you’re not in the dark about the potential risks.

The book quotes our own Catherine Geyman saying: “The (lack of) resilience of global pharmaceutical supply chain networks has been laid bare in recent years by the global drug shortage crisis.”

She is included as one of several “expert witnesses” in the book. Another is Professor Andrew Cox, Chairman of the Advisory Board & Vice President at the International Institute for Advanced Purchasing & Supply. He says this: “Unfortunately for the major Pharmaceutical companies that used to be the ‘channel captains’, who controlled the industry and all of its major supply chains through a judicious control internally of critical assets, there has been considerable evidence of very poor practice in outsourcing in recent years.”

This outsourcing has led to a significant decline in the visibility and control of the supply chains and is one of several problems identified in the book. Furthermore, while the focus is on big pharma, it makes clear that the problems with supply chains are not limited to the major companies.

In his introduction, Rees describes a visit to a small drug developer to try to persuade them to consider improving the supply chain: “As we progressed through the meeting, it became clear that he was explaining to me why what I offered was of no interest, because he was aiming to make an exit once proof of concept was achieved. The chance to exit would be almost entirely based on the clinical efficacy data. The supply chain thus created would be someone else’s problem.”

Whether it’s start-ups or the industry leaders, then, the supply chain is far too often seen as someone else’s problem. That leaves a lack of clarity around big questions such as where inventory is, its condition, its transportation, its storage and suppliers’ reliability.

Rees’s book is excellent at making clear many of the problems with the current model, and it is badly needed. Hopefully, though, some of its arguments are increasingly gaining traction. The point that the industry has focussed too much on new product development (the “find it, file it” part) at the expense of the supply chain, for instance, is one we’ve heard before.

There are some encouraging signs of action to address weaknesses, too. A recent survey of the wider healthcare industry in the US, for example, shows increasing numbers tackling risks in the supply chain such as security and compliance. However, in other respects there is still considerable work to do: only 60% of those surveyed, for example, think contingency planning is important – a majority, but not a very big one.

As the report notes: “Unplanned events have impacted healthcare supply chains in the last 3-5 years, but a large percentage of supply chain decision makers still do not consider the subject important.”

Changing such attitudes will take time, but it is vital. Rees’s book is a most welcome contribution to that effort.

A superb new book: Find It, File It, Flog It: Pharma’s Crippling Addiction and How to Cure it, includes expert witness from Catherine Geyman of Intersys.

Hedley Rees issues his challenge to the Drug Industry paradigms and orthodoxies, calling for a wholesale and radical reappraisal of an arguably outdated and inefficient Research and Development Value Chain and Supply Chain model.

This necessarily irreverent, but highly insightful, new book from the highly respected Rees, aims to disrupt and transform a model which has remained essentially unchanged since the 1950s.